CHICAGO, December 8, 2011 – A bad hire can lower a company’s productivity, affect worker morale and result in legal issues, and according to a new CareerBuilder survey, it is a problem a majority of American businesses have faced recently. More than two-thirds (68 percent) of employers said they were affected by a bad hire in the past year, on par with 2010.
The survey – conducted among 2,696 employers between August 16 and September 8, 2011, by Harris Interactive © – found that a single bad hire can significantly affect an organization’s bottom line. Forty-one percent of companies that made a bad hire estimate that it cost them more than $25,000 and one in four said it cost more than $50,000.
A bad hire costs much more than the average cost-per-hire. Forty percent of employers reported that a new hire typically costs $1,000 or less, 34 percent said between $1,001 and $5,000, and 27 percent said more than $5,000.
“It can be hard to predict how a new hire will fit with the organization or perform in their new role. Even though mistakes happen that are beyond the hiring manager’s control, the more thoroughly the candidates are vetted, the less likely they will be a poor match,” said Rosemary Haefner, vice president of human resources at CareerBuilder. “It’s important that candidates meet as many people in the department as possible – especially if they will work closely together. Also, if candidates say they are proficient in a skill critical to the job, they should provide ample evidence that their experience meets the organization’s needs.”
Why do companies make bad hires?
A rushed decision was the top reason companies gave for making a bad hire, but the survey found that there’s not often an easy explanation.
- Needed to fill the job quickly – 38 percent
- Not sure; sometimes you make a mistake – 34 percent
- Insufficient talent intelligence – 21 percent
- Didn’t check references – 11 percent
Effects of a Bad Hire
The price of a bad hire adds up in variety of direct and indirect ways. For example, nine percent of companies said bad hires result in legal issues and eleven percent said they result in fewer sales. The most common effects of a bad hire are:
- Less productivity – 41 percent
- Lost time to recruit and train another worker – 40 percent
- Cost to recruit and train another worker – 37 percent
- Employee morale negatively affected – 36 percent
- Negative impact on client solutions – 22 percent
Characteristics of a Bad Hire
When classifying what makes someone a bad hire, employers reported several behavioral and productivity related issues:
- Employee didn’t produce the proper quality of work – 63 percent
- Employee didn’t work well with other employees – 63 percent
- Employee had a negative attitude – 62 percent
- Employee had immediate attendance problems – 56 percent
- Customers complained about the employee – 49 percent
- Employee didn’t meet deadlines – 48 percent
This survey was conducted online within the U.S. by Harris Interactive© on behalf of CareerBuilder among 2,696 hiring managers and human resource professionals (employed full-time, not self-employed, non-government) between August 16 and September 8, 2011 (percentages for some questions are based on a subset, based on their responses to certain questions). With a pure probability sample of 2,696, one could say with a 95 percent probability that the overall results have a sampling error of +/- 1.89 percentage points. Sampling error for data from sub-samples is higher and varies.
CareerBuilder is the global leader in human capital solutions, helping companies target and attract their most important asset - their people. Its online career site, CareerBuilder.com®, is the largest in the United States with more than 24 million unique visitors, 1 million jobs and 40 million resumes. CareerBuilder works with the world’s top employers, providing resources for everything from employment branding and data analysis to recruitment support. More than 9,000 websites, including 140 newspapers and broadband portals such as MSN and AOL, feature CareerBuilder’s proprietary job search technology on their career sites. Owned by Gannett Co., Inc. (NYSE:GCI), Tribune Company and The McClatchy Company (NYSE:MNI), CareerBuilder and its subsidiaries operate in the United States, Europe, Canada and Asia. For more information, visit www.careerbuilder.com.